Following the interim results reported in FReD 7 September, DBIS has now published the full Foresight study on “The Future of Computer Trading in Financial Markets”. The study concludes that there is no direct evidence that high-frequency trading (HFT) has increased volatility or market abuse. It says HFT has beneficial effects on liquidity, transaction costs and price discovery. Despite this, the report says regulators need to tackle periods of illiquidity, self-reinforcing feedback loops and the lack of confidence that high perceived levels of market abuse generate. The report warns about policy measures that are likely to be problematic. It specifically identifies market making obligations, minimum resting times, order-to-execution ratios and restrictions on dark pools. It suggests using circuit breakers that are coordinated across markets and industry-agreed tick size policies. To improve the understanding of increasingly complex financial markets, the study recommends post-trade transparency, automatic forensic analysis and greater standardisation of data. Europe should also establish a European Financial Data Centre. (Source: Foresight Report on Computer Trading)